Transferring property to a family member: duty, tax and the conveyancing in NSW, VIC and QLD

Moving property within a family can feel different from selling to a stranger. There may be no agent, no open-market sale and no price. But moving the title is still a conveyance, and the duty, tax and mortgage questions do not disappear because the parties know each other.

A family transfer can mean adding a spouse or partner to the title, removing a former partner after separation, giving or selling a property to a child, or changing the shares between co-owners. The first question is what interest is moving, from whom and to whom. The next is whether a specific exemption applies, not simply whether the people are related.

A gift is still assessed at market value

In NSW, Victoria and Queensland, the dutiable value is the greater of the consideration and the unencumbered market value of the interest transferred. Consideration is what is paid. Market value is not replaced by a nominal price written into the transfer.

That means a gift is assessed as though the interest were sold at full value. The same applies where a parent sells to a child for a nominal sum. Calling it a family arrangement does not create a general duty exemption.

The revenue office expects evidence of value, usually a valuation. Where only a share is moving, the assessment concerns the interest transferred. Establishing that interest and obtaining acceptable evidence of market value are part of preparing the duty assessment, rather than questions to leave until lodgement.

NSW: the home, equal shares and relationship breakdown

Under section 104B of the Duties Act 1997, a transfer of the home between married or de facto partners is exempt where, after the transfer, they hold it as joint tenants or as tenants in common in equal shares and it is their principal place of residence.

The ownership arrangement after the transfer matters. Adding a partner to a title is not enough on its own to establish the exemption; the home and the resulting ownership must meet the conditions.

Transfers made under a Family Court order or a binding financial agreement on the breakdown of a marriage or de facto relationship are exempt under section 68. Other family transfers, including parent to child, are dutiable at the ordinary rates on market value. Our NSW stamp duty page explains the wider duty rules.

Victoria: the principal home, not an investment property

Section 43 of the Duties Act 2000 exempts a transfer of the principal place of residence between spouses or domestic partners. That exemption does not extend to an investment property. A transfer between partners therefore needs to be considered in the context of the property being transferred.

Transfers on the breakdown of a marriage or domestic relationship are exempt under section 44. A gift to a child or another relative remains dutiable at market value.

The principal place of residence rate can apply if the person receiving the property will live there and meets the occupancy requirement. It is a separate question from whether the transfer is a gift. See the Victorian stamp duty page for the state's duty information.

Queensland: no general family gift exemption

Queensland has no general exemption for gifts between family members. Under section 151 of the Duties Act 2001, a transfer of a share of the family home to a spouse is exempt where the spouses will hold it as joint tenants or tenants in common in equal shares and it is their principal residence.

Transfers under a Family Law order or binding financial agreement on the breakdown of a relationship are exempt under section 424. Other transfers, including parent to child, are dutiable on market value.

The home concession is available to a transferee who will occupy the property as their home. Receiving it from a relative does not itself establish that concession. The Queensland stamp duty page sets out the home concession and other duty information.

Foreign surcharge duty is a separate question

Foreign surcharge duty can apply in all three states where the person receiving the interest is a foreign person, including a family member who is not a citizen or permanent resident. It is charged on the same market value.

The family relationship does not remove the need to consider the recipient's status. This belongs in the duty assessment alongside the property, the interest moving and any exemption or concession being claimed.

Tax and Centrelink: get advice before signing

For the person transferring, a family transfer is a capital gains tax event. The market value substitution rule means a gift is treated for CGT as a sale at market value. Not receiving money does not, by itself, remove the tax question.

The main residence exemption and the relationship breakdown rollover can remove or defer the gain, but that is a matter for an accountant. For the person receiving the property, the cost base is market value.

Gifting a property can also affect Centrelink entitlements under the gifting rules. Settle Easy handles the conveyancing and duty lodgement. Tax and pension advice should come from an accountant or financial adviser before anything is signed, so the title transfer is considered alongside those consequences.

The mortgage needs the lender's consent

A lender must consent to any change in ownership of a mortgaged property. It usually requires the incoming owner to be added to the loan or the loan to be refinanced. Agreement within the family is not a substitute for that consent.

Allow time for the bank: it is the most common reason a family transfer is delayed. The transfer documents, duty assessment and lender arrangements all need to be ready for the change of ownership.

The conveyancing steps

The work follows a sequence:

• confirm who is transferring what share to whom
• obtain evidence of market value acceptable to the revenue office
• prepare and sign the transfer and any declarations for the exemption
• verify identity for all parties
• obtain the lender's consent, or the discharge and new mortgage
• lodge the duty assessment and pay any duty
• settle and lodge through PEXA
• update rates, water and land tax records.

There may be no open-market sale, but the transfer document, identity verification, duty assessment and electronic lodgement are still needed. Our property transfer service handles that conveyancing work.

For the duty position, read the state pages for NSW, Victoria and Queensland, then discuss the transfer with our property transfer team.